Cycles of intergroup revenge appear in large scale conflicts. We experimentally test the hypothesis that humans practice group-based reciprocity: if someone harms or helps them, they harm or help other members of that person’s group. Subjects played a trust game, then allocated money between other people. Senders whose partners returned more in the trust game gave more to that partner’s group members. The effect was about 60 per cent of the size of the direct reciprocity effect. Receivers’ allocations to group members did not depend on their partner’s play, suggesting that group reciprocity was only triggered when the partner’s intentions were unequivocal.

The honesty of residents of eight countries was measured in three ways: by the standard coin flip experimental paradigm, by a new experiment designed to resemble a test with the possibility of cheating, and by a questionnaire on integrity. I report findings on the differences in honesty across societies, and on the accuracy of respondents’ beliefs about different societies’ honesty levels. I also examine different methods of measuring honesty. While the coin flip paradigm successfully predicted cheating in the test, answers from the questionnaire did not correlate, or correlated in the wrong direction, with the two experimental measures.

We examine why heterogenous communities may fail to provide public goods. Current work characterizes sanctioning free-riders as an under-supplied public good. We argue that often free-riders can be punished by the coordinated action of a group. This punishment can be profitable, and need not be undersupplied. But the power to expropriate defectors can also be used to expropriate outgroups. Heterogenous societies may be inefficient because minorities, rather than free-riders, are expropriated. Even if this is not so, groups’ different beliefs about the reasons for expropriation may make the threat of punishment less effective at preventing free-riding. We illustrate our theory with evidence from California mining camps, contemporary India, and US schools. In a public goods experiment using minimal groups and a profitable punishment institution, outgroups were more likely to be punished, and reacted differently to punishment than ingroup members.

Field studies of conflict report cycles of mutual revenge between groups, often linked to perceptions of intergroup injustice. We test the hypothesis that people are predisposed to reciprocate against groups. In a computerized laboratory experiment, subjects who were harmed by a partner’s uncooperative action reacted by harming other members of the partner’s group. This group reciprocity was only observed when one group was seen to be unfairly advantaged. Our results support a behavioral mechanism leading from perceived injustice to intergroup conflict. We discuss the relevance of group reciprocity to economic and political phenomena including conflict, discrimination and team competition.

Previous political economy theories of globalization have focused on factor mobility's effect on different social groups. But factor mobility also increases competition between state rulers in providing services for their citizens. I ask how this interstate competition affects the process of political change in individual countries. In a simple model, interstate competition substitutes for democracy, by forcing rulers to invest in public goods so as to avoid capital and labor leaving the country. As a result, citizens are less willing to struggle for democracy, and rulers are less willing to oppose it, when interstate competition is strong. Therefore, there is less conflict over the level of democracy. The theory is tested on a post-war panel of countries, using the strength of neighboring countries' capital controls as a proxy for factor mobility. As the theory predicts, states experience fewer changes in their level of democracy when their neighbors are financially open.

Latest changes: New empirics using Chinn-Ito measure of financial openness.

Previous work has found that in social dilemmas, the selfish always free-ride, while others will cooperate if they expect their peers to do so as well. Outcomes may thus depend on conditional cooperators’ beliefs about the number of selfish types. An early round of the game may be played anonymously, so that contributions cannot be traced back to particular individuals. By protecting low contributors from potential sanctions, this encourages selfish types to reveal their true preferences in their play. We offer a simple model illustrating when revelation of types can increase contributions, and when only an anonymous game can separate types. As a proof of concept, we run a laboratory experiment involving a two-stage public goods game with an exclusion decision between stages. An anonymous first stage led to significantly higher stage-two cooperation than a revealed first stage, a slower decline across the 15 repetitions, unusually high final-stage contributions relative to previous work, and greater profits. Statistical analysis shows that the anonymous first stage reduced uncertainty about types, and this preserved cooperation and led to greater efficiency. Our results suggest that customs such as anonymous church donations may play an important role in building social trust.